Like a Nutrition Facts label listing the ingredients for the kind of energy powering your home, SDG&E’s latest Power Content Label shows the utility is providing less renewable energy than previously thought — and advertised by the utility.
That means SDG&E has a longer road ahead in reaching goals recently announced to drastically lower planet-warming gases the company’s products emit into the atmosphere.
The global economy has about a decade to drastically cut its use of fossil fuels (which create planet-warming gases) before there’s grave and irreversible damage to the comfortable climate we know today, according to the United Nations. As President Joe Biden makes broad stroke promises to do just that, private companies like SDG&E are now following suit and making commitments to reduce their emissions as well.
But in order to hold companies accountable for those promises, the public needs to know how much companies are polluting today.
SDG&E’s website said it provides “among the highest” amount of renewables in California and America. As of Wednesday morning, the company said on its website that 45 percent of the energy it provides is renewable.
Not so, according to the California Energy Commission, which sets the rules for utilities in reporting these kinds of numbers. The Energy Commission changed those rules in 2019 to clarify how renewable was the energy utilities deliver to California customers.
“The purpose of the regulation was greater transparency and to level the playing field so everybody is using the same math,” said Lindsay Buckley, a spokeswoman for the Energy Commission.
Before that change, utilities were combining two numbers the Energy Commission now says must be reported separately. There’s the actual energy San Diegans consume, which for SDG&E is only 31 percent zero-carbon, meaning it comes from energy sources like solar, wind, biomass or hydropower. And then there’s renewable energy credits, a common tool utilities use to meet climate targets set by the state for cutting planet-warming fossil fuels from entering our atmosphere.
Companies buy and sell these credits on the global marketplace. But their investments, while still in renewable energy projects, don’t increase the amount of carbon-free energy San Diegans consume at home.
“SDG&E can jump in and buy those (credits) more cheaply than what they’d have to spend to do it themselves to reduce carbon,” said Ryan Hanna, who studies decarbonization at the University of California, San Diego’s Center for Energy Research.
Utilities can no longer count these energy credits as part of their renewable energy portfolio. They’re reported in a different category, as a percentage of their energy sales that are actually renewable energy credits.
That rule change resulted in a 12 percent drop in the amount of renewable energy SDG&E reported it provided San Diegans. In 2018 its power mix was 43 percent renewable, but after the rule change, SDG&E’s 2019 power mix was just over 31 percent.
After Voice of San Diego inquired about SDG&E’s inflated renewables number on its website, spokeswoman Helen Gao said the utility should have updated to reflect the change. On Thursday, the website said the company delivers about 40 percent renewable energy to customers.
SDG&E is relying on the 40 percent number as part of a different state-mandated energy standard.
Another California agency, the Public Utilities Commission, keeps track of how well energy companies are complying with something called the Renewables Portfolio Standard, a state law that eventually requires all of California’s electricity be carbon-free by 2045.
That number includes the energy credits companies buy.
“The (RPS), that’s what we’re held by. The Power Content Label is a disclosure tool and the RPS is something we have to meet by law,” Gao said.
Net Zero or Zero Promises?
This all matters because SDG&E recently announced it wants to achieve “net zero” planet-warming emissions by 2045. That means the company can emit planet-warming gases as long as it offsets that by cutting an equivalent amount of emissions, by providing cleaner natural gas, for example.
Quick lesson here: Getting a community like San Diego to “net zero” is not the same as “zero emissions.” Creating no or zero emissions means just that. We just stop using fossil fuels.
But to hold the company to its “net zero” promise, the public needs to know how many emissions the company creates now – commonly called an emissions baseline. Nobody really knows what SDG&E’s baseline is, not even the company itself. The company produced its own greenhouse gas emissions estimate in its Sustainability Report, but hasn’t taken a detailed and verified inventory, Gao said.
The Sustainability Report says 39 percent of SDG&E’s total greenhouse gas emissions come from purchasing the kinds of power that makes customers’ electricity and another 42 percent come from customer use of the natural gas it provides – things reported in the Energy Commission’s Power Content Label.
In the near future, SDG&E won’t be in charge of purchasing much power anyway. The responsibility of cleaning that electricity will fall on new government-backed power agencies called community choice aggregators. Cities like San Diego joined or created these because they wanted to provide more renewable electricity to their citizens faster than SDG&E.
There’s still a 400-pound gorilla in the room for SDG&E: natural gas, a fossil fuel widely used in San Diego for cooking and heat and almost half of its greenhouse gas emissions.
“There will continue to be some role for natural gas in the system well into the future. That’s why you see discussion around net zero,” said Estela de Llanos, SDG&E’s sustainability and chief environmental officer. “It means we need to lower the carbon intensity of the gas we deliver, and that means we look at hydrogen.”
Hydrogen as a possible fuel source has grown increasingly popular recently. It’s become a big market focus of SDG&E’s parent company, Sempra Energy, in part because the carbon-free fuel can theoretically be mixed with natural gas to lower the energy source’s overall greenhouse gas emission content.
SDG&E’s net zero plan includes announcements of a planned green hydrogen project that would use excess solar from a solar farm in Borrego Springs to split hydrogen from water and use it as a fuel.
Climate advocates called SDG&E’s net zero plan a “greenwashing” attempt by the company.
“This plan allows them to continue to profit off us with fossil fuels, and that’s not what our community needs. It’s not where the planet is headed,” said Mat Vasilakis, co-director of policy at Climate Action Campaign.
Hanna, the researcher from UCSD, likened the net zero craze to an “arms race.”
“Firms now look bad if they’re not making these kinds of pledges. I think they ran the calculus on 2045. … That’s a long time and a lot can change, so there’s little drawback to making these pledges now and outlining a broad or general strategy for getting there,” Hanna said.
The cost of SDG&E’s net zero plan on ratepayers is “unknown at this time,” Gao said in an email, “as we have not and no one has worked out the precise path to get there.”
The company “is focused on finding the most effective solutions to reduce [greenhouse gas] emissions. We feel a sense of urgency to address climate change by accelerating innovations, such as energy storage and hydrogen,” Gao wrote.